Brief for the Respondent in Opposition — Hertz Corp. v. Cox

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® LIBRARY

supec*— TOURT. uv. S

In the Supreme Court of the Uniteé-

OCTOBER TERM, 1972

No. 72-1559

THE HERTZ CORPORATION,

Petitioner,

vs.

DONALD COX and SARAH CROWE HARRIS,

Respondents.

BRIEF OF RESPONDENTS OPPOSING

PETITION FOR WRIT OF CERTIORARI

JAMES I. PARKER

DonaLp B. Howe, Jr.

Wape C. Hoyt, Jr.

Attorneys for Respondents

Of Counsel:

PARKER AND O’CALLAGHAN

208 Main Street

Cedartown, Georgia 30125

Howe, Howe & Sutton

18 Alabama Street

’ Tallapoosa, Georgia 30176

Rocers, MAGRUDER AND Hoyt

P. O. Box 268

Rome, Georgia 30161

BE. L. Mexpewwate., Ivc., 926 Cherry Street, Kansas City, Mo. 64106, 421-3030

TABLE OF CONTENTS

Question Presented —.......--------------------------eeee re 1

Reasons for Not Granting the Writ 2

Ground One—Stearns Case Did Not Define

“Proper Insurance” 3

Ground Two—Cases Differ on Law and Facts -....... +

Ground Three—Erie v. Tompkins Settled Differ-

ences ; a

Ground Four—Law of the Case 10

Ground Five—The Question Is Moot -................-.-- 11

Appendix—

Opinion, United States Court of Appeals for the

Fifth Circuit (June 19, 1967) Al

Page One, Rental Agreement -............----------------------- Al7

Index of Authorities

CASES

A. & W. P. R. Co. v. Wyly, 65 Ga. 121 -........----..------ i)

Buster v. Wright, 135 F. 947, App. Dis. 203 U. S. 599, 27

S Ct 777, 51 L. ed. 334 (1905) _.......----------------------------- 11

Citizens & Southern National Bank v. Huguley, 100 Ga.

App. 75, 110 S E 2d 63 9

Crowe, et al. v. Hertz Corporation, 382 F 2d 681 (1967)

4,5,6

Davis v. O'Hara, 266 U. S. 314, 69 L. ed. 303 (1924), 45

a aoeeccncameonannniecsidudijhiieineianivanniniocasomntnpein 11

Davis, et al. v. Fidelity Fire Ins. Co. of Baltimore, et al.,

208 Ill. 275, 70 N E 399 _______.____._____-__--------- 4

II

Diza A. v. Patterson, 263 U. S. 399, 68 L. ed. 356 (1923),

44S Ct 151 11

Erie Railroad Company v. Tompkins, 304 U. S. 64, 82

L. ed. 1188, 58 S Ct 817 2,8

Galpin v. Page, 85 U. S. 350, 21 L. ed. 959 11

Ga. Power Co. v. Whitlock, 48 Ga. App. 814, 174 SE

162 ae

Insurance Company of North America v. Atlantic Na-

tional Insurance Company, 328 F 2d 769, 771 ............ 10

Messenger v. Anderson, 225 U. S. 436, 56 L. ed. 1152

(1912), 32 S Ct 739 10

N. L. R. B. v. Pittsburgh SS Co., 340 U. S. 498, 95 L. ed.

ae ee sheet atceueee 12

Rice v. Sioux City Memorial Park Cemetery, Inc., 349

U. S. 70, 99 L. ed. 897, 75 S Ct 614 ~

Sowell v. Sowell, 212 Ga. 351, 92 S E 2d 524 —...... 9

Stearns v. Hertz Corporation, 211 F. Supp. 506 (E. D.

Mo. 1962) 3

Stearns v. Hertz Corporation, 326 F 2d 405 (8th Cir.

1964) 2

TABLE OF STATUTES AND OTHER AUTHORITIES

37 Am Jur 2d, Fraud and Deceit, $342 Generally, p.

458 4

‘41 ALR 1057, 1078 ;

Ga. Code Ann. §105-302 ...... re

In the Supreme Court of the United States

OCTOBER TERM, 1972

No. 72-1559

THE HERTZ CORPORATION,

Petitioner,

vs.

DONALD COX and SARAH CROWE HARRIS,

Respondents.

BRIEF OF RESPONDENTS OPPOSING

PETITION FOR WRIT OF CERTIORARI

Petitioner omitted the first and extremely important

opinion of the United States Court of Appeals for the Fifth

Circuit in this case. It is Crowe, et al. v. Hertz Corpora-

tion, 382 F 2d 681 (1967) and is included in respondents’

Appendix.

QUESTION PRESENTED

In presenting its question to the Court, the petitioner

has assumed legal conclusions which respondents respect-

fully submit are not correct. Respondents do not agree

2

that the Eighth Circuit, in deciding that there was no

cause of action ex contractu in Stearns v. Hertz Corpora-

tion, 326 F 2d 405, has defined the term “proper insurance”

te mean only that insurance required by the laws and

customs of the place where a vehicle is rented and driven

and that it is in conflict with the decisions of the Fifth

Circuit Ccurt in the instant case which is a cause of action

ex delicto based on fraud and deceit.

REASONS FOR NOT GRANTING THE WRIT

The petitioner contends that the case of Stearns V.

Hertz Corporation, 326 F 2d 405 (8th Cir. 1964) is in ir-

reconcilable conflict with the decisions in this case. Re-

spondents disagree and oppose the Petition on five grounds.

We respectfully submit that, first, the Stearns case

does not hold that “proper insurance” means only the

minimum insurance required under Illinois law; second, the

case of Stearns v. Hertz Corporation, 326 F 2d 405 (8th

Cir. 1964) differs from this case on its facts; third, it is

immaterial, under Erie Railroad Company v. Tompkins,

304 U. S. 64, 82 L. ed. 1188, 58 S Ct 817, that laws of two

states interpreted in Federal Circuit Courts differ. If, in

fact, the 8th Circuit held in Stearns that Illinois law is

that the minimum required by law is “proper insurance”

that is certainly not the law of Georgia; and fourth, the

law of the case was established so far as “proper insur-

ance” is concerned by an earlier decision of the Circuit

Court and could and should have been appealed then.

Fifth, the point is moot because Hertz stopped advertis-

ing proper insurance in the late fifties.

3

GROUND ONE

Stearns Case Did Not Define

‘‘Proper Insurance”

In the Stearns case, the plaintiffs proceeded against

Hertz on three theories: (1) that the passenger exclusion

clause in the Continental policy provided by Hertz vio-

lated an Illinois statute; (2) that the renter, Sutton, had

relied upon Hertz’s advertisement of “proper insurance” as

meaning passenger coverage, creating an implied contract,

and (3) thet the passenger exclusion clause was violative

of the public policy of Illinois. The trial court, hearing

the case without a jury, found that there was no contract

to furnish passenger coverage and that the exclusion in

the rental contract and in the policy was not violative of

public policy.

The Stearns case proceeded on a theory of contract and

warranty that Hertz had failed to provide what it had ad-

vertised and promised. The finder of fact (the Court with-

out a jury) found against the plaintiffs. The language

found in, the trial court’s decision of the Stearns case,

Stearns v. Hertz Corporation, 211 F. Supp. 506 (E. D. Mo.

1962), reproduced on page A-32 of The Petition clearly

shows that the trial court considered the case to be in con-

tract. The Court’s language is as follows:

“Plaintiffs further contend that Benson's state-

ment that Hertz furnished $25,000 '$50.000 liability

coverage and $5.000 property damage created an ob-

ligation to furnish coverage in this amount for in-

juries to any person. However, this oral statement,

even if it could be censtrued as suggested by plain-

tiffs, could not be used tc vary the terms of the writ-

ten rental agreement, which unequivocally excludes

coverage for passengers”.

4

Judge Harper, in the next paragraph, cited an IIli-

nois case, Davis, et al. v. Fidelity Fire Ins. Co. of Baltimore,

et al., 208 Ill. 275, 70 N E 359, which sets forth the rule

that a written contract cannot be enlarged by parol evi-

dence. Then the Court went on and made the point that

distinguishes the Stearns case from this case as follows:

“There are some exceptions to the above rule, the

general exception being one of fraud, but there is

nothing in the testimony in this case in any way that

would make the contract an exception to this general

rule.” (A-33)

The holding in Stearns is simply that the plaintiffs

therein could not recover ex contractu. It did not hold

that “proper insurance” is the minimum required by law.

GROUND TWO

Cases Differ on Law and Facts

The present case against Hertz is one in tort for fraud

and deceit. This is a statutory remedy in Georgia. Ga.

Code Ann. §105-302.

The measure of damages for fraud and deceit is the

actual damage sustained, 37 Am Jur 2d, Fraud and Deceit,

$342 Generally, p. 458.

The Fifth Circuit Court distinguished the cases in

the following language:

“Hertz contends that Stearns is on all fours with this

case and is not distinguishable. We disagree. In

Stearns the misrepresentation occurred in _ Illi-

nois, the rental agreement was signed in Illinois and

the accident occurred in Illinois. It was conceded

that the law of Illinois would control. Id. at 406. In

b)

this case, while the rental agreement was signed in

the Bahamas and the accident occurred in the Baha-

mas, the misrepresentations and the wrongs occurred

in Georgia and Kentucky, respectively.” Crowe, et

al. V. Hertz Corporation, 382 F 2d 681. (R App. 7, 8).

There are other points of distinction between the two

cases.

The Stearns case was in contract. The Stearns case

sought to impose a contractual duty on Hertz by virtue of

an Illinois statute; by an implied contract; and through

public policy. Because the Eighth Circuit rejected these

contentions, Hertz now says that the parties in this case

are restricted to an insurance policy written under Ba-

hama law which permits the issuance of liability policies

on self-drive automobiles which excludes passengers.

A concise statement of the facts in this case was set

out by Judge Tuttle in the first report, Crowe v. Hertz

Corporation, 382 F 2d 681 (R App. 2).

As stated by Judge Tuttle, the substance of the com-

plaint was that the defendant, The Hertz Corporation,

held itself out, both by long, continuous and saturation

type advertising to offer Rent-A-Car services through-

out the world; that this service included complying with

the highest standards of insurance coverage; . . . that Miss

Crowe was entitled to the protection of a public liability

insurance policy, both contracted for from the local agency

and as held out under the policy actually issued for the

protection of the drivers against liability claims of pas-

sengers and thus excluded any benefit to an injured pas-

senger like Miss Crowe; that this exclusion was false and

contrary te the representations contained in national ad-

vertisements of the Hertz Corporation and amounted to a

fraud upon the renters of automobiles such as Cox, for

6

which recovery could be had for the benefit of the pas-

senger. Crowe v. Hertz Corporation, 382 F 2d 681 (1967).

Petitioner conveniently overlooks the evidence that it

told its stockholders, in 1964, that its advertising program

assured the public that it had insurance of the “highest

standards” and gave Hertz’s assurance to each customer

that he will be satisfied with ‘“‘all phases of his car rental

anywhere in the world.” See Crowe v. Hertz Corpora-

tion, 382 F 2d 681 at p. 684. By its own admission, peti-

tioner shows by 1964 it meant to go even farther than

just “proper insurance.”

The statement from the 1964 annual report of the

Hertz Corporation quoted in Judge Tuttle’s opinion,

makes a much stronger case against Hertz than the evi-

dence in the Stearns case, which is as follows:

“‘Certified Service’ was vigorously merchan-

dised during the year to emphasize the quality of

Hertz Rent-A-Car. This program—an_ industry

exclusive, backed up a pledge of $50 in car rental cred-

its—sets the highest standards for equipment used,

maintenance, appearance, cleanliness, insurance cov-

erage and reservation reliability. It is Hertz’s assur-

ance to each customer that he will be satisfied with

all phases of his car rental anywhere in the world”.

Crowe v. Hertz Corporation, 382 F 2d 681 at p. 684.

(R App. 7).

The basic issue for determination in this case as set

out by the Circuit Court’s first opinion was whether or

not a corporation could advertise itself as a worldwide cor-

poration affording insurance of the highest standards to

Americans wherever they might travel in the world,

and avoid responsibility for its representations made

through the various news media of the country by answer-

ing that it furnished the minimum required by law.

7

The rental agreement on the automobile involved in

the collision was attached to the plaintiff's original com-

plaint and was introduced into evidence. Page one of the

agreement is attached hereto as a part of the appendix.

There is a considerable amount of printed matter on

page one, of which the following is a part, to-wit:

or

7. The vehicle is covered by an automobile liabil-

ity insurance policy, a copy of which is available for

inspection at the main offices of Lessor upon re-

quest by customer. Said policy contains bodily injury

or death liability, limits of $100,000.00 for each person

in each accident, $300,000.00 for all persons in each ac-

cident, and property damage liabilities of $25,000.00

for each accident.”

This statement, like the Hertz advertising, was false—

no such policy of insurance existed. A policy without lim-

its covered the automobile, but passengers were excluded.

This rental contract stated that all persons were insured;

while the contract in the Stearns case expressly excluded

passengers.

In early discovery, the following interrogatories were

submitted to defendant, The Hertz Corporation, regarding

insurance, to-wit:

“9. Was there a policy of liability insurance with

limits of $100,000.00 for each person and each accident,

$300,000.00 limits for all persons in each accident, prop-

erty liability limits of $25,000.00 for each accident, in

force covering the Vauxhall Victor 4 door sedan auto-

mobile in which plaintiff was injured on June 8, 1965?”

To this interrogatory, the defendant, by its vice-presi-

dent, Mr. Reiter, answered:

“This defendant has no knowledge or information con-

cerning the liability insurance, if any, on the automobile.”

8

Another question followed:

“10. Give the names of any and all insurance com-

panies having liability insurance coverage on said ve-

hicle on June 8, 1965.”

To the question, the defendant answered simply,

“See answer to 9.” (C. A. No. 2, p. 371).

These answers, we say, show a complete and utter dis-

regard of the responsibility Hertz had assumed by its ad-

vertising. As can be seen by the advertisement described

in the decisions in this case, along with the admission of

Hertz’s annual report, it had advertised worldwide that

Hertz’s automobiles were covered not just by insurance, but

by “proper insurance”, “public liability insurance”, and in-

surance of the “highest standards.” Yet, in these answers

to interrogatories, it admitted that it did not even know

whether there was insurance on this automobile. This

statement alone, we submit, made a case of fraud and

deceit.

GROUND THREE

Erie v. Tompkins Settled Differences

Under the rule laid down in the often cited case of

Erie Railroad Company v. Tompkins, 304 U. S. 64, 82 L.

ed. 1188, 58 S Ct 817, we are only here concerned with

Georgia law.

The Court of Appeals of the State of Georgia has fre-

quently interpreted the word “proper” as modifying the

word “lookout.” In such instances, the Court has held

that “proper lookout” is a matter to be interpreted under

all the circumstances by a jury. In the operation of an

automobile or airplane such questions are for the jury.

9

In Citizens & Southern National Bank v. Huguley, 100

Ga. App. 75, 77, 110 S E 2d 63, the Court stated “we have

already seen that it may be gross negligence to fail to

keep a proper lockout ahead.” (Italics added).

Both the Court of Appeals of Georgia and the Su-

preme Court of Georgia have defined “proper care and

diligence.” “Proper care, reasonable care, and ordinary

care and diligence are synonymous, and proper care is the

equivalent of ordinary care.” A. & W. P. R. Co. v. Wyly,

65 Ga. 121; Ga. Power Co. v. Whitlock, 48 Ga. App. 814,

174S E 162.

The Supreme Court of the State of Georgia, in the

case of Sowell v. Sowell, 212 Ga. 351, 92 S E 2d 524, dis-

cussed at length the distinction between a “proper party”

and a “necessary or indispensable party”.

The case was decided in 1956 when demurrers were

still a part of our civil procedure in Georgia. The joinder

or nonjcinder of proper parties were the subject of special

demurrers while the failure to name a necessary or indis-

pensable party left the petitioner without a cause of action

and the court without jurisdiction and therefore, was the

subject of a general demurrer. As to proper parties to

a suit, the matter was left to discretion or choice.

The point of this analogy is that the word proper has

been recognized by the courts of Georgia to mean some-

thing less than an absolute standard either maximum or

minimum.

An examination of the definition of the word proper,

in Webster’s New International Dictionary, Third Edition,

reveals that it has many meanings such as appropriate, fit,

suitable, and right, but it certainly does not create an ab-

solute standard.

10

By advertising proper insurance, Hertz did not set

for itself an absolute minimum, but that which was rea-

sonable and prudent.

As pointed out in the first decision of the Fifth Cir-

cuit Court, the evidence in this case was that it is com-

mon, customary and actually universal usage in Georgia

that liability insurance policies cover guests and passen-

gers in automobiles driven by one having expressed or im-

plied permission of the owner or insurer (R App. 7, 9, 10).

It is interesting to see that the Fourth Circuit Court of

Appeals has considered a policy almost identical to the pol-

icy in this case and found it to be substandard. It held in

Insurance Company of North America v. Atlantic National

Insurance Company, 328 F 2d 769, 771, that an automo-

bile liability policy on a Hertz vehicle excluding coverage

as to passengers or as to operation of an automobile in

violation of a rental agreement was neither a “standard

provision automobile liability policy”, nor “substantially

the equivalent”, thereof under Virginia law.

GROUND FOUR

Law of the Case

This case has been in litigation since the summer of

1965. Although the Circuit Court of Appeals has decided

this case twice before, Hertz did not appeal to this Court,

but was content to allow the case to be remanded and re-

tried. As defined by Mr. Justice O. W. Holmes, the law

of the case expresses the practice of the Courts generally

to refuse to reopen what has been decided. Messenger v.

Anderson, 225 U. S. 436, 56 L. ed. 1152 (1912), 32 S Ct

739. Respondents recognize that this Court has ruled that

it will not be bound, as a matter of law, by decisions of

Courts of Appeals unappealed from in previous appeals.

11

Buster v. Wright, 135 F. 947, App. Dis. 203 U. S. 599, 27

S Ct 777, 51 L. ed. 334 (1905); Diza A. v. Patterson, 263

U. S. 399, 68 L. ed. 356 (1923), 44 S Ct 151; Davis v. O’Hara,

266 U. S. 314, 69 L. ed. 303 (1924), 45 S Ct 104; Galpin v.

Page, 85 U. S. 350, 21 L. ed. 959. See the annotation at

41 ALR 1057, 1078. However, no reason appears or can

appear why Hertz could not have sought a ruling by this

Court on this exact point when it had the opportunity to

do so on the previous appeals to the Fifth Circuit Court

of Appeals. Petitioner has insisted at every stage of this

case that it is controlled by Stearns. The case was cited

no less than seven times in its first brief in the Circuit

Court.

Its election to abide the previous decisions without

appeal has caused respondents great expense and consid-

erable delay in trying a long and difficult case. This type

of deliberate delay is unnecessary, unfair and conducive

to criticism of our judicial system.

GROUND FIVE

The Question Is Moot

The sole question presented by the petitioner is what

meaning the term “proper insurance” should have. A

conflict between decisions of the Fifth Circuit and the

Eighth Circuit is alleged. No other reason is given to the

Supreme Court in seeking review on Writ of Certiorari.

We respectfully submit that the question is now moot.

“Proper insurance” has not been used in Hertz Advertise-

ment since the late fifties. The general counsel for the

Hertz Corporation testified at the last trial that the phrase

“was insignificant in terms of sales or any other—for any

other purposes.” (C. A. No. 2, App. 530, 531, 537). The

“impossible burden and uncertainty” created by the “rea-

12

sonable renter passenger definition” applied to “proper

insurance” by the Fifth Circuit described in the Petition

seems to us to be somewhat akin to the hysteria of Chicken

Little.

CONCLUSION

The differences in results in the Stearns case and this

case arise entirely upon differences of the facts as framed

in the pleadings. The rental contract in Stearns described

an insurance policy which excluded passengers. The con-

tract in the instant case described a policy that covered

passengers. The Stearns case sought relief ex contractu

seeking to modify a contract which could not be done.

The present case is an action ex delicto for fraud and de-

ceit. These differences certainly present no “real and em-

barrassing conflict of authority by the Courts of Appeals”

requiring review by this Court. N. L. R. B. v. Pittsburgh

SS Co., 340 U. S. 498, 95 L. ed. 479, 71 S Ct 453; Rice v.

Sioux City Memorial Park Cemetery, Inc., 349 U. S. 70,

99 L. ed. 897, 75 S Ct 614.

Respectfully submitted,

JAMES I. PARKER

DonaAtp B. Howe, JR.

Wape C. Hoyt, Jr.

Attorneys for Respondents

Al

IN THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 23775

SARA C. CROWE, by and through L. L. CROWE, as next

friend, and DONALD COX,

Appellants,

versus

THE HERTZ CORPORATION,

Appellee.

Appeal from the United States District Court for the

Northern District of Georgia.

(June 19, 1967.)

Before TUTTLE, Chief Judge, AINSWORTH, Circuit

Judge and FULTON, District Judge.

TUTTLE, Chief Judge: This is an appeal from a

summary judgment dismissing a personal liability damage

suit arising out of an injury suffered by the appellant in

the Bahama Islands while she was riding in an automobile

driven by the defendant, Donald Cox, rented by the latter

from the local Hertz Rent-A-Car station. The appeal is

joined by Cox, an original defendant, whose cross-com-

plaint against Hertz was also dismissed by the order of

the trial court.

The substance of the complaint was that the defend-

ant, The Hertz Corporation, held itself out, both by long,

continuous and saturation-type advertising to offer rent-

a-car service throughout the world; that this service in-

A2

cluded furnishing of the highest standard of insurance

coverage; that Cox, together with two friends, rented a

“Hertz” car for their use from a rent-a-car station bearing

the “Hertz” sign and symbol under circumstances that

made Cox an insured driver; that in driving the appellant,

Miss Crowe, on the roads in the Bahamas, Cox was in-

volved in a head-on collision with another car owing to

his lack of knowledge of the local driving requirements

that automobiles be driven on the left rather than the

right side of the road; that Cox’s negligent driving seri-

ously injured the plaintiff;' that Miss Crowe was entitled

to the protection of a public liability insurance policy,

both contracted for from the local agency and as held out

under the worldwide advertising by the defendant, Hertz

Corporation; that the policy actually issued for the pro-

tection of the drivers of the rent-a-car system in the Ba-

hamas excluded protection of the drivers against liability

claims of passengers and thus excluded any benefit to an

injured passenger like Miss Crowe; that this exclusion

was false and contrary to the representations contained

in national advertising of the Hertz Corporation and

amounted to a fraud upon the renters of automobiles such

as Cox, for which recovery could be had for the benefit of

the passenger.

In his defense, Cox admitted the accident, but de-

nied liability, contending that the accident was not due

to his negligence. Cox also filed a third party claim over

against the Hertz Corporation, reasserting the grounds

of action as alleged by Miss Crowe and also relying upon

the holding out by the national advertising of Hertz

Corporation to him as a renter of a Hertz car.

1. The allegations of the complaint showed that Miss Crowe

had suffered brain damage and was unable to conduct the case

on her own account, thus accounting for the suit being brought

by her father as next friend.

A3

In view of our conclusion that the trial court erred

in summarily dismissing not only Miss Crowe’s, but also

Cox’s claim against the Hertz Corporation, without de-

termining whether there existed facts upon which relief

could be granted in the event that Hertz was found to

be a proper party defendant, we find it necessary to make

a fairly full statement of the facts.

The following is a statement which the trial court

found to be uncontradicted facts. The statement is taken

from the opinion of the trial court.

On June 7, 1965, the defendant, Donald Cox, with

Bill Grubbs and Aldo Bergomi went to a desk bearing

a large sign, “Hertz Rent A Car” at the Sheraton British

Colonial Hotel in Nassau, Bahama Islands, where an auto-

mobile was rented. It was a 1964 or 1965 model Chevelle

red convertible.

The three of them talked with each other in the

presence of the man at the desk about sharing the use,

and cost, of the car rental and discussed with the man

the rental cost, with and without insurance, and decided

to contract to pay the “with insurance” rate. The man

at the desk, so Cox believes, wore a shirt or uniform with

a parallelogram “Hertz” on it. Donald Cox believed that

-the three of them rented the automobile jointly, but only

Bergomi signed the rental agreement.

Cox drove the rented car away from the rental agency

on the afternoon of June 7, 1965, and the three of them

took turns driving about the island. That night Cox and

Grubbs used the car. Bergomi was not along. Cox and

Grubbs returned the keys to the “Hertz” desk at the hotel

that night. Bergomi, Cox and Grubbs divided the costs

of renting the car.

A4

Late the next day, on June 8, 1965, Bergomi told

Grubbs and Cox that he wanted to again rent a car and

asked them if they wished to ‘go in on it”, and they agreed

to share the use and expense of the car. Bergomi went

alone and rented a Vauxhall 4-door sedan and the three

boys drove the three Crowe girls about the island.

On the evening of June 8, 1965, Cox and the plaintiff,

Sara Crowe went out in the car together and at about

11:30 P.M. were involved in a headon collision with an-

other automobile and the plaintiff was injured.

After the accident the wrecked car was towed to a

large fenced in lot bearing a large “Hertz” sign and there

stored.

The Hertz signs were the same type as used by the

Hertz Corporation in their advertising in the United States.

After the occurrence here involved, Mr. James I.

Parker visited Nassau, and a “Hertz” Rent A Car station

nearby and photographed the station, which bore “Hertz

Rent A Car”’ signs.

On March 23, 1966, counsel for plaintiff, Harold L.

Murphy, along with associate counsel, James I. Parker,

went to the office of Hertz Rent A Car in Nassau, Bahamas,

to interview its manager, Terry Morrissey, and while wait-

ing for him, Mr. Murphy picked up from the ground to

the rear of the offices certain receipts and certain rental

car invoices showing the front and back of rental contracts.

Mr. Murphy examined the agreements found there

with rental agreements issued by offices of the Hertz

Corporation in the United States, and the rental agreement

issued upon the automobile in which plaintiff was riding

at the time of her injury, and in each instance found page

one to be identical, and page two to be identical except

AS

for the filled in information as to type of car, charges, time,

etc.

At the time of Murphy’s visit to “Hertz Rent A Car”

Nassau, Bahamas, he acquired a Hertz Rent A Car reser-

vation entitled Hertz Reservation Office, 660 Madison

Avenue, New York, N. Y., reserving an automobile for a

customer arriving at Nassau, Bahamas, on March 10, 1966,

which address is also that of the executive offices of the

Hertz Corporation as shown in the 1964 annual report of

the Hertz Corporation.

At the office of Hertz Rent A Car in Nassau, “Hertz

Rent A Car” signs were prominent in several places as

were the same type signs in two rental station places in

down town Nassau. This is the same type sign that appears

on rental agreements issued by the Hertz Corporation and

its licensees in the United States.

Murphy obtained at the Hertz Rent A Car office in

Nassau a Hertz circular advertising Hertz Rent A Car and

Hertz Service in Nassau— “We'd like to show you Nassau.

Let Hertz put you in the driver’s seat,” etc. “Just give us

a call at 77366 or 23496 and watch Hertz in action.”

Van G. Hunt, an expert on American automobile lia-

bility insurance, has read advertisements displaying the

Hertz Rent A Car in a parallelogram familiar to him as

the Hertz trademark, which advertisements contain the

language, “Rental fees include—all gasoline, oil . . . public

liability, property damage, fire and theft insurance, and

$100 deductible collision protection”, and which state Hertz

low rates cover everything including $100 collision protec-

tion. Hunt also read in the 1964 Annual Report of the

Hertz Corporation:

“ ‘Certified Service’ was vigorously merchandised

during the year to emphasize the quality of Hertz Rent

A6

A Car. This program—an industry exclusive, backed

up a pledge of $50 a car rental credits—sets the highest

standards for equipment used, maintenance, appear-

ance, cleanliness, insurance coverage and reservation

reliability. It is Hertz’s assurance to each customer

that he will be satisfied with all phases of his car

rental anywhere in the world.”

It is Mr. Hunt’s opinion that “proper insurance” in-

cludes adequate public liability insurance to cover personal

injury caused by the negligence of an insured driver to

protect him from claims of persons who might be struck

by the automobile or injured while riding therein as a

passenger.

“According to custom, practice and usage in the

insurance industry, bodily injury liability insurance

is considered the most important coverage in the field

of automobile insurance and would certainly be in-

cluded in ‘proper insurance’.

“According to common usage and custom in the

insurance industry, bodily injury liability insurance

covering passengers of an automobile would certainly

be included in ‘insurance coverage’ of ‘the highest

standard’ as referred to as a part of ‘certified service’

in the Hertz Corporation 1964 annual report.”

On August 15, 1965, Mr. James I. Parker went to

Nassau, Bahamas, to investigate the automobile collision of

June 8, 1965, and the claim of Sara C. Crowe and while

there Mr. Terry Morrissey furnished to him a carbon copy

of a rental agreement which is attached to the complaint,

stating to Mr. Parker that this was the office copy of the

rental agreement on the automobile in which plaintiff was

injured.

A7

At Morrissey’s direction Mr. Parker went to the

agency office of McCarthy Miller, Ltd, and was there

told by the adjuster in charge that the automobile in which

plaintiff was riding at the time of the collision was covered

by a policy of insurance issued by Fireman’s Insurance

Company of Newark, New Jersey, but that there was no

coverage afforded plaintiff because she was a passenger.

Passengers, he stated, were excluded. The adjuster fur-

nished to Mr. Parker a copy of the policy provisions which

were made available to the Court.

The place where Mr. Morrissey was interviewed was

outside the City of Nassau, near the airport, and bore

several large Hertz signs similar in color and design to

the usual Hertz signs.

A wrecked Vauxhall at the rear of the building was

pointed out by Morrissey as the automobile in which plain-

tiff was injured.

Hertz, Hertz Rent A Car System, during the years

1956-64 advertised in Time Magazine. Many of these ad-

vertisements in the years 1956, 1957, 1958 and one or more

in 1959 and 1960, and more than one in 1961 and 1962 stated

that the low Hertz rates include everything, gas, oil, in-

surance or proper insurance. One advertisement on Oc-

tober 26, 1959, stated that Hertz has over 1750 offices

spread throughout the United States and 31 foreign coun-

tries.

It further stated wherever you are, wherever you are

going, there is a Hertz office nearby to serve you.

This advertisement further stated that Hertz rates

include gas, oil and proper insurance.

Other ads stated “Hertz pays for insurance, gas and

oil”, or “Hertz pays for everything, insurance, gas and oil.”

A8

Mr. James Brown, an expert on automobile liability

insurance is of the opinion that “proper insurance with ref-

erence to automobile coverages” would in all instances

be “a liability insurance policy of standard terminology in-

cluding liability claim protection as a result of personal

injuries and property damages together with coverage for

medical payments for passengers riding within the insured

vehicle. This coverage is the customary coverage in the

industry.”

Mr. Brown is of the opinion that the insurance cover-

age afforded by the Firemens Insurance Company policy

identified by Mr. Parker is not standard, is inadequate

and does not afford even elementary requirements of a li-

ability insurance policy.

The Hertz Corporation 1964 Annual Report, at page

12, states:

“INTERNATIONAL OPERATIONS.

“Hertz Service outside the continental United

States is provided by Hertz American Express Inter-

national, Ltd., the subsidiary jointly owned by the

corporation (51 per cent) and by the American Ex-

press Company, Inc. (49 per cent) ....”

The Hertz Corporation Annual Report 1965, under

the heading “International Operations”, at page 14, states:

“The strong leadership position of Hertz in the

international field was further enhanced by expan-

sion on a worldwide front in 1965. Since its forma-

tion in 1957, Hertz American Express International,

Ltd., (49 per cent owned by The American Ex-

press Company, Inc.) has become the largest vehicle

renting and leasing organization operating outside the

United States.”

AQ

The plaintiff, Sara C. Crowe, underwent brain sur-

gery at Emory University Hospital on Mrch 24, 1966, and

is neither physically nor mentally able to give an affi-

davit for use herein at this time.

The plaintiff, prior to her injury, was a school teacher,

a college graduate, well read and was a regular reader of

Time Magazine and other national magazines and in the

opinion of her father was familiar with the Hertz adver-

tisements and the Hertz trademark.

In addition to the facts above stated by the trial court

and adopted by us as correctly stating the posture of the

matter at the time the trial court passed on the motion for

summary judgment, the trial court also stated the follow-

ing as being uncontroverted facts:

“It appears from the affidavit of Mr. Reiter, a vice

president of the Hertz Corporation, that the Hertz Corpo-

ration was not doing business and did not do any business

in the Bahama Islands during the year 1965, including June

8, 1965.

“That Caribbean Holding Company (Bahamas, Ltd.)

was not on June 8, 1965, nor at any time since that date

the agent or representative of the Hertz Corporation.

“That the Hertz Corporation did not furnish to the

said Caribbean Holding Company any written rental

agreement, and did not require that Caribbean Holding

Company use the printed form as charged in the complaint.

“That Firemans Insurance Company of Newark, New

Jersey, was not an insurance carrier for the Hertz Corpo-

ration with respect to any matter set forth in the com-

plaint in this case.”

Based entirely upon the affidavit of Mr. Reiter and

upon the Hertz Corporation’s annual statement that “Hertz

Al0d

service outside the continental United States is provided

by Hertz American Express International, Ltd.” the trial

court dismissed the complaint against Hertz. The court

said:

“Plaintiff undertakes by circumstantial evidence to

show that the Hertz Corporation was present and doing

business in Nassau, Bahamas on June 8, 1965. However,

the circumstances upon which Plaintiff relies are consist-

ent with the testimony of Mr. Reiter and Hertz Corpora-

tion’s statement in its annual report that ‘Hertz service

outside the continental United States is provided by Hertz

American Express International, Ltd... .’

“A fact cannot be established for circumstances

which are perfectly consistent with direct, uncontradicted,

and unimpeached testimony that the fact does not exist.”

32 A. C.J.S. Evidence, $1039, pp. 755, 756. See also Wood

v. Keen, et al, 207 Ga. 317 (1).

“It is thus uncontroverted that the Hertz Corporation

was not doing business in Nassau, Bahamas, on June 8,

1965, nor at any time that year. It is also uncontroverted

that the company operating the Hertz Rent-A-Car place

was not the agent or representative of the Hertz Corpora-

tion and that the Hertz Corporation had no knowledge of,

and did not participate in the renting on June 8, 1965, of

the car in which plaintiff was riding at the time of her

injuries.”

Thereupon the trial court dismissed the Hertz Corpo-

ration as a defendant, both as to the suit by Miss Crowe

and as to the third party claim by defendant Cox.

In dismissing the complaint against the Hertz Corpo-

ration it is obvious that the trial court did so on the theory

that the transaction between Cox and his friends in the

Bahamas was not with the Hertz Corporation either di-

All

rectly or through an agent of that company. This, it seems

to us, overlooks the essential nature of the suit that is

brought by Miss Crowe and particularly as contended for

by Cox, who admittedly is a protected driver of a “Hertz

Rent-A-Car” so far as being entitled to insurance pro-

tection is concerned. The complaint is based on the as-

sumption that every person reading and relying upon the

Hertz advertising is warranted in accepting as true the

statement that wherever a “Hertz” car is rented world-

wide, the person relying upon such advertising is guaran-

teed that the highest standard of insurance protection is

offered; that in this case the defendant Hertz Corporation,

whether or not acting through its agent in the usual sense

nevertheless provided through its subsidiary corporation

for the renting to Cox of a “Hertz” car which did not have

the insurance protection guaranteed to the public. The

trial court stated, “The court recognizes the principle of

law that where misrepresentations are made to the public

at large with the intention of influencing any member of

the public, then anyone injured through proper reliance

thereon may secure redress,” citing Hinds v. Wilson, 164

Ga. 889 (2) (b). The court then stated: “This principle

of law which plaintiff seeks to invoke has no application

under the facts here.”

This conclusion was doubtless based upon the court’s

prior determination that the Hertz Corporation was not

present either in person or through an agent in the Ba-

hama Islands.

We think it plain that the presence or absence of the

Hertz Corporation in the Bahama Islands at the time this

automobile was rented by Cox and his friends, is irrele-

vant to the cause of action asserted by the injured plain-

tiff. Certainly it is irrelevant to the cross action filed on

Al2

behalf to Cox to secure his insurance protection in the

event Miss Crowe should recover against him.

Moreover, we conclude that the trial court dealt too

summarily with the question of the agency of the local

“Rent-A-Car” station in the Bahamas for the Hertz Cor-

poration. The quoted language in the trial court’s opin-

ion that a fact cannot be established by circumstances

which are consistent with the direct, uncontradicted and

unimpeached testimony that the fact does not exist, comes

the Georgia case of Wood v. Keen, et al, 207 Ga. 317 (1),

which cites the United States Supreme Court’s opinion

in Pennsylvania R.R. v. Chamberlin, 288 U.S. 333 (1932),

a case which we have had occasion to discuss fully in an

opinion just published in Planters Manufacturing Co. v.

Protection Mutual Insurance Company, No. 23019, Dec.

May .. ., 1967. As we stated in that opinion (see foot-

note 4) the language of the Chamberlin case may no

longer be a correct statement of the federal jurisprudence

in light of the more recent Supreme Court decision in

Lavender v. Kurn, 327 U.S. 645, a point which we felt

was not necessary for our decision in the Planters Manu-

facturing Company case. But see Preston v. Safeway

Stores, 163 F. Supp. 749 (D.C.). Nor do we think it

necessary to determine this question here. This is true

because we think it quite clear that the existence vel non

of “agency,” or “representative,” a status or relationship

depending upon all the facts and circumstances, is not such

physical or historical fact of the kind contemplated with-

in the rule. If it were possible for a witness to directly,

without contradiction, and without impeachment, testify

flatly that he was not an agent or representative of an-

other so that no circumstances, however strong, and no

facts relating to conduct of the parties, or anything else

could be permitted to overcome such conclusionary testi-

mony, a large function of the fact finder’s role in the de-

Al3

cisional process would be eliminated. It would be tanta-

mount to a rule that if Party A swears he was not neg-

ligent, then Party B could not prove A’s negligence by

circumstantial evidence.

“It is a well settled principle of law that actual

agency may be proved from the habits, course of deal-

ing and apparent relations; that is to say, that when

a course of dealing has been prolonged with the knowl-

edge and consent of the principal, actual agency can

be inferred from such course of dealing.”

Piedmont Operating Co. v. Cummings, 40 Ga. App.

397.

Whether an agency exists is not solely dependent upon

the announced purpose of intention of the parties, for the

law creates a relation of principal and agent if the parties,

in their conduct of their affairs, actually place themselves

in such position as requires the relationship to be inferred

by the courts. Thus, even though a party may testify pos-

itively that there is no “agency,” in existence between

his company and another, this does not deprive the party

relying on the existence of such agency to introduce evi-

2. Purely as an illustration of the reason why such rule

cannot be recognized, we note the obvious equivocal nature of

Reiter’s bald statement: “Caribbean Motor Holding Co. (Ba-

hamas) Ltd. [the owner of the Hertz Rent-a-car station in

Nassau] was not, on June 8, 1965, or at any time since said date,

an agent or representative of the Hertz Corporation,” (emphasis

added) when viewed in light of the fact stated in the annual report

for 1964: “Hertz service [dealing, of course, with service of

interest and financial benefit to Hertz Corporation stockholders]

outside the continental United States is provided by Hertz Ameri-

can Express International, Ltd.” Should the jury be precluded

from ascertaining whether the Hertz American Express Interna-

tional licensee in Nassau was not some kind of a “representative”

of the Hertz Corporation which advertised its service: to the

stockholders as a significant part of the corporation’s operations?

At the very least it “represented” that it was in a position to

carry out part of the Hertz Service, which included the plea,

worldwide, “Let Hertz put you in the driver’s seat.”

Al4

dence showing the actual ccnduct of the parties if such

conduct is such as would permit an inference to be made

that the relationship of agency truly exists. See Griffin

v. Russell, 144 Ga. 275. See also 3 Am. Jur. (2d), Agency,

$17,18.

What we have said here deals with actual agency, not

the creation of an agency by estoppel for the protection of

one who has relied upon the appearance of such relation-

ship. However, in this case it is equally available to the

cross-claimant Cox to undertake to show, if the facts war-

rant it, that an agency by estoppel existed as to him, since

he actually dealt with the “Hertz Rent-a-car” station in

the Bahamas. Such an apparent agency could not exist for

the benefit of the person injured without reliance upon the

apparent holding out of the principal. See Piedmont Op-

erating Co. v. Cummings, supra.

Because of the determination by the trial court that

the Hertz Corporation was not present in the Bahamas

through its agent, the court did not consider whether the

complaint alleged a state of facts upon which relief could be

granted either to Miss Crowe or to the cross-complainant

Cox. We, therefore, do not pass on these questions. We

hold that the circumstances found by the court to exist were

sufficient to require that the case not be disposed of on mo-

tion for summary judgment dealing with the existence vel

non of an agency for the Hertz Corporation in the Bahama

Islands. We also conclude that the actual presence of the

Hertz Corporation by an authorized agent in Nassau is not

requisite to the bringing of the complaint against the Hertz

Corporation on the theory propounded by the plaintiff and

adopted by the cross-complainant—that is to say, the theory

that the Hertz Corporation acted contrary to its widely ad-

vertised statements relating to the making available of max-

imum insurance protection as to every Hertz car when, by

Ald

whatever arrangement, it permitted its subsidiary to in

turn license a local operator who failed to do what the ad-

vertisements promised. Again we do not here consider

whether the complaint, as finally amended, established

a cause of action, because this issue has not been passed on

by the trial court. The ground for dismissing the suit be-

ing in error, the case must be returned for further consid-

eration of the trial court.

The judgment dismissing the complaint and cross-

complaint against Hertz Corporation is REVERSED and

the case is REMANDED for further proceedings not incon-

sistent with this opinion.

POOR COPY

RENTAL AGREEMENT a

tet HERTZ put you In the driver's seat !

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10 without Limactor of any generat obligations 0” ‘epont s umpoted by other promos of the Reval Agreement C. tome: shall be solely liable ond respons ble

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11, No nght of Lester under ths Rentol Agreement =o, be waved except by 0 ein asrument duty wanes by the Premdent ond Secretary of Lessor

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